Back
2017 Supreme(Ori) 641
IN THE HIGH COURT OF ORISSA AT CUTTACK
B.R. SARANGI, J.
Regional Provident Fund Commissioner, Rourkela - Petitioner
Versus
Sundergarh Mining Labour Contract Cooperative Society Ltd. and another - Opp. Parties
OJC NO. 1859 OF 2002
Decided On : 26-07-2017
For the Petitioner:M/s. Mr. S.K. Pattnaik, Sr. Adv. along with Mr. U.C. Mohanty, and M.K. Pati, Advocates.
For the Opp. parties :Mr. P.K. Mohanty and S.K. Nayak, Advocate.
Headnote:EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - Sec. 14 -B - EPF Scheme, 1952 - Para 32 A - Power conferred u/s. 14-B on Provident Fund Commissioner to impose damage on an employer defaulting in payment of contributions to the Provident Fund is not unguided nor arbitrary, and, hence, it’s not violative of Art. 14 of the Constitution - An order u/s.14-B must be a speaking order containing the reasons in support of it - Guidelines are provided in the Act, 1952 and its various provisions, particularly in the word ‘damages’ the liability for which in Sec.14-B arises on the ‘making of default’ - While fixing the amount of damages the Regional Provident Fund Commissioner usually takes into consideration various factors viz. the number of defaults, the period of delay, the frequency of defaults and the amounts involved - Word ‘damages’ in Sec. 14-B lays down sufficient guidelines for the Commissioner to levy damages.
In the present case held, imposition of penal damages as contemplated u/s.14-B of Act, 1952 by the authority is well within its competency - Rates of damages are to be imposed, as has been specified in Para 32 A of the EPF Scheme, 1952, and the same cannot be modified or altered - Directions issued by the Appellate Authority to recalculate the penal damages @ 5%, in addition to the interest accrued on account of penalty for the period of default, is contrary to the provisions of law - Order passed by the Appellate Tribunal, being contrary to the provisions of law, is required to be set aside and accordingly set aside. (Paras - 6, 13 and 14)
JUDGMENT :
DR. B.R. SARANGI, J.
1. The petitioner, which is an authority under the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, has filed this application challenging the order dated 27.01.2000 in Annexure-3 passed by Employees’ Provident Fund Appellate Tribunal in Appeal Case No. ATA-10 (15) 99 setting aside the order dated 04.08.1999 passed under Section 14-A imposing penal damages and remitting the matter back to the petitioner for reassessment of the damages in the light of the observation made therein.
2. The factual matrix of the case is that opposite party no.1-Sundergarh Mining Labour Contract Cooperative Society Ltd. is an establishment covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short “EPF and MP Act, 1952”) and carries on business of mining limestone at Purunapani. As per Para-38 of the Employees Provident Funds Scheme, 1952 (for short “EPF Scheme, 1952”), provident fund contributions are to be paid within 15 days of the claim of every month by deducting the employees contribution realized from the wages paid along with employer share. If the employer makes any default in payment of contribution, he is liable to pay penal damages under Section 14B of the EPF and MP Act, 1952. Para-32A of the EPF Scheme, 1952, which was introduced in 1991, envisages the rate of penal damages to be imposed for different period of delay. The rate has been so fixed in Para-32A in order to curb the imposition of 100% damages in all cases irrespective of the period of delay and this provision also left no discretion with the Regional Provident Fund Commissioner to go below the rates, which are fixed for imposition of penalty on an employer, who recovers from employees’ share but does not deposit the same within time specified.
2.1 Opposite party no.1, having defaulted and caused substantial delay in depositing the amount of contribution for the period from March, 1993 to February, 1997, was noticed on 08.10.1998 to file explanation and also appear before the petitioner on 18.11.1998 for personal hearing. In response thereto, opposite party no.1 filed reply on 23.10.1998 admitting the delay in each month and took a stand that deposit of EPF contribution was delayed due to non-payment of bills by the purchasers of limestone. The petitioner, being the acting authority under Section 14B of the EPF and MP Act, 1952, after considering the contention raised by opposite party no.1 for delay in payment of contribution, imposed penal damages at the graded scale fixed under Para-32A of the EPF Scheme, 1952 and demanded Rs.3,58,935/-towards penal damages. Against such demand, opposite party no.1, pending disposal of the review application filed by it on 13.08.1999, preferred OJC No.10603 of 1999 and this Court, by order dated 27.08.1999, declined to entertain the writ petition and directed opposite party no.1 to file appeal before the appellate tribunal. In compliance of the same, opposite party no.1 filed appeal under Section 7-I of the EPF and MP Act, 1952 and the appellate authority, by order dated 27.01.2000, set aside the order imposing penalty under Section 14B of the Act and remitted the matter back to the petitioner for reassessing the damages in the light of the observation made therein, hence this application.
3. Mr. S.K. Pattnaik, learned Senior Counsel appearing along with Mr. N.C. Mohanty, learned counsel for the petitioner vehemently contended that the rate of penal damages to be imposed in exercise of power under Section 14B of the EPF and MP Act, 1952 as per Para-32A of the EPF Scheme, 1952 and, as such, neither the Regional Provident Fund Commissioner nor the appellate tribunal has any discretion to vary the said rates fixed by the Central Government. When the appellate tribunal held that the employer is liable to pay the damages for delayed payment of
